Sapient Q3 Earnings Decline; Sees Q4 Service Revenue Above Street View

11/5/2009 10:15 PM ET

(RTTNews) - Thursday, Sapient (SAPE: News ), a provider of business marketing and technology consulting services, reported lower earnings for the third quarter, hurt in part by charges. The company also announced fourth quarter revenue expectation above analysts' estimates.

The Boston, Massachusetts-based company posted third quarter net income of $5.9 million, down from $18.1 million in the corresponding period last year. Adjusted net income per share declined to $0.04, from $0.14 per share in the same period last year.

On an adjusted basis, non-GAAP net income fell to $14.73 million from $23.4 million in the year-ago quarter. Non-GAAP net income per share declined to $0.11 from $0.18 per share in the same period last year. Results for the quarter exclude stock-based compensation expense, restructuring and other related charges, amortization of purchased intangible assets, acquisition costs and other related charges.

On average, nine analysts polled by Thomson Reuters expected the company to earn $0.07 per share for the quarter. Analysts' estimates typically exclude special items.

Service revenues declined 7% to $165.5 million from $177.7 million in the same period last year, but exceeded eight Street analysts' consensus estimate of $162.03 million. Revenue for the quarter include revenue related to Sapient Nitro, which was acquired on July 1, 2009. On a constant currency basis, revenues decreased 3% over the prior year's quarter.

Commenting on the result, Alan Herric, president and chief executive officer, Sapient said, "We remain well positioned for the future. Clients' reaction to the Sapient Nitro combination has been very positive and is already generating new business. We are also seeing new opportunities due to an improved level of client confidence in the business environment."

For the nine-month period, GAAP net income declined to $18 million or $0.14 per share from $36.8 million or $0.28 per share in the year-ago period. non-GAAP net income declined to $38.2 million or $0.30 per share from $52.9 million or $0.42 per share in the same period last year. Total gross revenues declined to $475.4 million from $515 million a year earlier.

Looking ahead, for the fourth quarter, the company expects service revenues to be in the range of $172 million to $175 million compared to Street analysts consensus estimate of $168.62 million for the quarter. Non-GAAP operating margin is expected to be between 10% and 11%.

SAPE rose $0.32 or 3.86% and closed Thursday's regular trading session at $8.60. After hours, SAPE rose further $0.20 or 2.33% and traded at $8.80.